China's Baby Bust

Shifting gears from money to love, here’s a little something to think about with Valentine’s Day on Saturday…

Chinese couples will be making a lot fewer babies in the years ahead.

And this has major implications for the country’s future growth.

A baby bust might sound counterintuitive to anyone who follows China. After all, the governrnment announced in 2013 that it would be relaxing its One Child Policy. Most China watchers assumed this would lead to a Chinese baby boom. But they’re ignoring the large demographic elephant in the room: babies require mothers. And after three decades of the One Child Policy, China is about to have a major shortage on that front.

Take a look at the chart below. It forecasts the population of Chinese women by age using demographic data from the United Nations.

As you can see, China’s population of women of prime childbearing age (25 to 29) goes into steep decline this year and doesn’t significantly recover… ever.

Average age of marriage and first childbirth are rising worldwide, and as a general rule the more developed a country becomes, and the more educated its women become, the higher the age the women get married and have their first child.

So let’s assume that China’s women, like many Westernrn women, are postponing motherhood until their early 30s. Even then, China has a major problem. Its population of women aged 30 to 34 goes into steep decline starting in 2020.

Conception is still possible into the late 30s and 40s, of course. But it gets far more difficult and, realistically, it limits family size. You can’t have a large family if you’re getting started in your late 30s. And in any event, the population of women aged 35 to 39 goes into steep decline 10 years from now as well.

Let’s say that Chinese women, aided by new technology, somehow rewrite the laws of human anatomy and make large families possible into early middle age. Even then, China has a major problem: the country has evolved with small families as the norm and costs have risen accordingly.

Living costs have risen in the cities to the point that large families aren’t economically viable for the vast majority of Chinese households, and urban apartments are not big enough to accommodate them.

This is a major problem for China and for any Westernrn company that has made large investments in Chinese growth. Children are the future. You need them to pay the taxes and man the factories of tomorrow.

More critically, in the age of modernrn consumer capitalism, you need them swiping the credit cards and buying the homes of tomorrow. This is particularly critical for China given its governrnment’s stated goal of reorienting its economy away from exports and toward domestic consumption.

Is mass immigration of young women the answer? Well, that sounds good, at least to the red-blooded young men in the room. But the math doesn’t quite work out. China’s population of 20- to 24-year-old women shrinks by about 30 million over the next 10 years.